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of 1989 (OBRA), Pub. L. 101-239, sec. 7721(a), 103 Stat. 2106,
2395.
Petitioners assert that they are not liable for the addition
to tax and accuracy-related penalties for negligence or disregard
of rules or regulations, or substantial understatement of tax,
because of their state of upheaval during the investigation and
prosecution of petitioner for his check-kiting activity.
With respect to 1988, the reasonable cause exception does not
apply. OBRA sec. 7721(a). Thus for 1988, petitioners are liable
for the addition to tax for negligence pursuant to section
6653(a)(1) and the addition to tax for substantial understatement
of tax pursuant to section 6661(a). Petitioners presented no
evidence with respect to the failure to timely file their 1988
Federal tax return, and thus they are liable for the addition to
tax pursuant to section 6651(a)(1). Rule 142(a).
With respect to 1988, 1989, and 1990, petitioners made an
inadequate effort to determine their proper tax liability.
Although their business records were generally in disarray,
petitioners had some grocery/convenience store records that could
have been presented to their accountant, Mr. Mules, or to Revenue
Officer Scilipoti, including the box of bills and the calendar
reflecting daily gross receipts. These records were presented to
petitioners' attorney and to the IRS in the course of the IRS's
audit. Petitioner's preoccupation with his criminal problems does
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